Jobs Turn Ugly. Will Fed Swoop In?

Economic analysts expect the U.S. Federal Reserve’s Federal Open Market Committee meeting Wednesday will affirm the central bank’s current monetary policy. However, some recent economic data support the view that the recovery remains tentative and that very accommodative policies are still necessary. The March employment numbers came in well under expectations, and the number of initial jobless claims for unemployment benefits has unexpectedly climbed in recent weeks since hitting a low point in February. Despite the possibility that sluggish expansion could slow down job growth, the minutes from the last meeting revealed that only a “couple of members indicated that the initiation of additional stimulus could become necessary if the economy lost momentum.”

The Federal Reserve is expected to reiterate the pledge to keep rates at the current level, targeting between zero percent and 0.25% until 2014. “The Federal Reserve has more or less committed itself to keeping the Fed funds rate at zero until 2014 unless the economy starts to grow pretty fast. I think that is the most that can be said,” observes Charles Weise, Ph.D., economics professor at Gettysburg College in Gettysburg, PA.

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